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What to Make of Nio’s Price Hike

NIO stock - What to Make of Nio’s Price Hike

Source: Sundry Photography / Shutterstock.com

The inevitable has finally played out as Chinese electric vehicle (EV) giant Nio (NYSE:NIO) follows its peers in hiking prices for its cars. Nio and its peers are feeling the heat from rising raw material prices, resulting in production constraints in the interim. Let’s explore what this means for NIO stock.

The EV firm announced it would be raising the prices of its EC6, ES6, and ES8 models by $1,570. However, the hike will not affect the starting prices of its upcoming ET7 and ET5 sedans. The new prices will be effective from May 10. William Li, founder and chief executive officer of Nio, believes that raw material prices have gone up immensely this year and a downward trend isn’t in sight. Moreover, he states that originally, the plan was to bear the pressure of the hike, but the company had to bump prices amidst fresh lockdowns.

The automaker suspended production at its Hefei, Anhui province factory on another somber note. Its supply chain partners have all suspended production due to the latest Covid-19 outbreak in China. As Nio recently reported record deliveries in March, these developments come as a major downer. January and February were relatively muted in deliveries, which led to a massive sell-off in NIO stock. However, the company is in for a bumpy road, at least for the short-term.

Nevertheless, Nio has performed incredibly well over the past couple of years and is early in its prolific growth story. Its revenues have grown over 122% in the past year and over 1,500% on average in the past five years. The recent pullback in price offers a highly attractive entry point for those looking to open up a position. Short-term risks remain with the business, but its long-term bull case remains intact.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

Article printed from InvestorPlace Media, https://investorplace.com/2022/04/what-to-make-of-nio-stock-price-hike/.

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